Categories
Events Presentation Services TBM

When your world changes , how do you cope?

In Business, everything changes eventually.
If you have modeled your Service costs, there are lots of changes that require an update or change to the model.

    Things in your company/service can change:

  1. Has your company undergone a re-org?
  2. Are you using a new technology to deliver the service?
  3. Did you outsource all or part of the service?
  4. Did you change vendors? Are you changing the billing model for your customers?

    Your general philosophy toward service costing may have changed– perhaps you are maturing from a flat allocation to the business to a service consumption model.

    You may be changing tools that you use to model the Service costs. – is it time to put an automated model in place?

    Whatever the change, there is a likely impact to the actual cost of service and you will need to be able to explain why and how the service costing will change so that the business can be prepared. There is nothing worse that getting a bill and seeing a rate change in the bill for the first time.

    Recently at the ITFMA conference in Atlanta, we presented and had great discussion with the group on things to consider to rationalize and socialize a service costing change. It includes things to avoid (all of which are mistakes we have seen real customers make before we start with them) as well as things to be certain to include in your planning.

    Enjoy!

    If you are getting ready to embark on a project that impacts your services costs, please reach out to us for some deeper advice and engagement:



Categories
Services TBM

The Service Portfolio Management Maturity Curve

ServicePortfoliomaturity We often hear organizations convincing themselves that they couldn’t possibly get the data needed to do comprehensive Service Portfolio Management. The truth is that every organization has the data they need to start their journey to maturity. Many companies start with a basic cost/consumption dashboard and then grow that as they mature the internal data sources that provide metrics on project investment, SLA performance, risk and SVA (Service Value Agreements) performance. Starting the journey is the first step toward maturity- contact us for more information on how to get started today.

Categories
Services TBM

ServiceNow’s Service Costing vs ITFM Modules

iStock_000005703253_LargeAt the recent ServiceNow Knowledge15 conference, there was growing buzz around the new ITFM module, but some confusion around how the new module would compare with the already existing Service Costing module. Once you understand how they both work,the difference becomes clear and the possibilities for how they can work together are exciting.

The Service Costing module has been around for a bit, and is based on each service having a set “cost”. The confusion enters because ServiceNow calls this a “cost”, when it is really a “rate” or “price”. It is a set, fixed amount that a customer would have to pay for the Service. This is very useful for companies who are fairly mature in their TBM journey and are ready to use a P*Q methodology for either Showback or Chargeback to the business. In this case the P (Price) is the rate or “Cost” that is set in the Service Costing module and the Q (Quantity) is the quantity of the service being requested by the customer. Using this module assumes that you understand the cost composition of your services in order to set a reasonable price (cost to the consumer) and that the business is ordering services in specific quantities.
Most companies get stuck on knowing what rate to set for their services, because they do not understand the cost composition of their services. This is where the new ITFM module comes into play.
The new ITFM module is the newest entry in a landscape of tools that includes Apptio, VMWare’s ITBM, and Upland Software’s ComSci, among others. This new ServiceNow module allows you to model the cost composition of services using your financial data combined with the operational data already in ServiceNow or other IT Operational Systems. For companies who have little insight in the cost composition of their services,we recommend implementing a modeling tool like this so that they can measure and monitor their actual costs ( internal to IT) as well as variance to Budget, and learn enough to be able to set a reasonable rate.
With both modules in place, Service Owners as well as IT executives get the transparency and insight they need to manage the cost of services to the rate ( or price) they are charging.

Categories
Services TBM

Service Portfolio Management Dashboard- a Sneak Peek

ServicePortfolioDashboard1ServicePortfolioDashboard2 We have had a lot of excitement this week, previewing our Service Portfolio Management Dashboard built in ServiceNow on top of the ITFM module and wanted to share with a wider audience here. This dashboard will at first only be available to our ServiceNow ITFM customers and leverages the power of Explore Analytics Visualization platform to bring together the Cost, Consumption, Performance, Risk and Value metrics into one convenient dashboard. The quad bubble chart leverages a Thavron algorithm to calculate Business Value and Business Prioritization of Services so that execcutives can quickly and easily see where to focus resources. Contact us for demos and more information.

Categories
Events Metrics Presentation Services

The IT Service Portfolio

We were happy to lead a lively workshop full of discussion on the IT Service portfolio at the ITFMA conference in Norfolk.
The workshop covered the IT Service Portfolio definition, metrics and getting to real business value measurements. The Guide slides from that workshop are embedded here, or are available on SlideShare.
Be sure to contact us if we can answer any questions or assist you on your journey.

Categories
Services TBM

What are your terms of Service?

Hardworking man eating at his desk I wanted to shatter one of the biggest myths about Enterprise Business Services today.

Just because you bill( or showback) a service price (cost) monthly or quarterly, that number does not have to be driven by direct consumption of that service for the previous period.

How can I say this when it seems contrary to the Holy Grail of Service Consumption tracking?

At both ITFMA and ITFM Week this month ( is there something about tax month that drives finance folks to put conferences in April?) I have heard people struggle with customers who are grumpy when a change in consumption does not impact the bottom line directly.  Inevitably, as I talked with them I found out that they had forgotten to include a term (length) of the Service.

This is so common sense, it gets overlooked.

Every month, you likely pay for at least two kinds of services at home- bills driven by monthly consumption ( your utility bills are a perfect example of this) and a bill for items with large sunk costs that are a monthly amortization of those costs and have a minimum  time commitment ( your mortgage or your car payment).  If you stop living in your house, or stop driving your car you still have to pay those monthly charges, unless you transfer ownership to someone else.

When you have an Enterprise service that requires a large sunk cost, it is OK to design it so that there is a minimum time commitment that the consumer has to make.

Of course, it is true that your Enterprise may force you to think outside the box and find a way to provide that same service WITHOUT the sunk costs so they can be more flexible, but that is a topic for another post.

Categories
Excellence Frameworks Opinion Services

Always exceeding expectations? That doesn’t mean you are excellent.

In consulting, there is a constant push to “exceed customer expectations”. It makes sense in our business- since we are coming in as experts, we should have experiences and perspectives that allow us to see broader trends and opportunities than our clients, who are often buried in the details of running and growing a single business.
iStock_000019901721XSmall
But today, I want to challenge the idea that always exceeding customer expectations is a good measure of excellence. Exceeding expectations can happen when one of two things happens- either expectations were too low, or you behaved better than anyone expected.

Expectations being set too low could be a symptom of a lack of confidence, poor communication, or in some cases, just plain laziness. Exceeding these low expectations is certainly not a sign of excellence.

But, you may protest- what if the expectations are realistic and correctly set? Isn’t exceeding correct expectations a sign of excellence? To which we would answer- it depends.

At what cost were expectations exceeded? If manufacturing specs were exceeded without extra processing time or cost- EXCELLENT. But if exceeding the specs doubled the cost or time of manufacturing- not so great at all. If you successfully close a major project 2 weeks ahead of time with no unintended impacts- EXCELLENT. But if you beat the deadline by focusing more resources on that project, and thus missed the deadline for 4 other projects- that is poor program management, not excellence at all.

Certainly then, if the expectations are realistic and exceeding them produces no negative impact, an organization where expectations are always exceeded is an excellent one, right?

Far from being excellent,  an organization that always exceeds expectations is one headed for obsolescence. If targets are carefully set and always exceeded- then there is no stretch, no growth, no risks and no innovations.

In a healthy, thriving, growing business we would expect to see some goals met, some goals exceeded and some which fail.  The mark of an excellent organization is not how many goals they exceed, but in how they react to the successes and failures.